2022 (2) TMI 1413 - HC - Income Tax

Validity of reopening of assessment - period of limitation - statutory formalities u/s 148A - as argued Income Tax Authority concerned, before issuing the impugned notices u/s 148 have not observed the statutory formalities u/s 148A as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April, 2021 before issuance of notices u/s 148 on or after 1st April, 2021? - HELD THAT - In view of judgments and orders of this Court in the case of Manoj Jain Vs. Union of India Ors. 2022 (1) TMI 741 - CALCUTTA HIGH COURT and in the case of Bagaria Properties and Investment Private Limited Anr 2022 (1) TMI 742 - CALCUTTA HIGH COURT all these writ petitions herein are disposed of by allowing the same. Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void. All the impugned notices under Section 148 of the Income Tax Act are quashed with liberty to the Assessing Officers concerned to initiate fresh re-assessment proceedings in accordance with the relevant provisions of the Act as amended by Finance Act, 2021 and after making compliance of the formalities as required by the law.

Summary

Issues:
Challenging impugned notices under Section 148 of the Income Tax Act issued post 31st March, 2021; Seeking quashing of re-assessment notices; Declaration against certain Notifications extending applicability of tax provisions; Legality of statutory formalities under Section 148A of the Income Tax Act.

Analysis:
The High Court of Calcutta heard multiple Writ Petitions together due to common legal questions and facts. The main contention was the issuance of impugned notices under Section 148 of the Income Tax Act post 31st March, 2021, with allegations of non-compliance with statutory formalities under Section 148A of the Income Tax Act as per the Finance Act, 2021 effective from 1st April, 2021. The petitioners sought relief by challenging the re-assessment notices and declaring certain Notifications extending the applicability of tax provisions as ultra vires the Relaxation Act, 2020.

The issues raised in the Writ Petitions were predominantly legal in nature, focusing on quashing the impugned re-assessment notices issued by the Income Tax Authority after 31st March, 2021. The petitioners also sought a declaration against specific Explanations in Notifications dated 31st March, 2021, and 27th April, 2021, extending the applicability of tax provisions beyond the specified period, alleging inconsistency with the parent legislation, the Relaxation Act, 2020.

The counsels for all parties collectively acknowledged that the legal matters in these Writ Petitions were addressed in previous judgments by different High Courts, including the Allahabad High Court, Rajasthan High Court, and Delhi High Court. Referring to these precedents, the High Court of Calcutta disposed of the Writ Petitions in favor of the petitioners based on the judgments delivered in similar cases. Consequently, the Explanations in the Notifications were declared ultra vires the Relaxation Act, 2020, rendering them invalid. The impugned notices under Section 148 of the Income Tax Act were quashed, allowing the Assessing Officers to initiate fresh re-assessment proceedings in compliance with the amended provisions of the Act post the Finance Act, 2021.

In conclusion, the High Court granted relief to the petitioners by declaring the challenged Notifications as legally invalid and quashing the impugned re-assessment notices. The judgment emphasized adherence to the revised provisions of the Income Tax Act post the Finance Act, 2021 for any future re-assessment proceedings, ensuring compliance with the statutory requirements.